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FDA Law Blog is published for informational purposes only; it contains no legal advice whatsoever. Publication of FDA Law Blog does not create an attorney-client relationship. FDA Law Blog is the blog of Hyman, Phelps & McNamara, P.C. (“HPM”) and it is intended primarily for other attorneys and regulatory professionals. No part of FDA Law Blog --whether information, commentary, or other-- may be attributed to HPM's clients. Readers should be aware that HPM represents many companies in the food, drug, medical device, and health care industries, and therefore FDA Law Blog may occasionally report on news that relates to HPM clients. FDA Law Blog will always strive to be unbiased in its reporting. All information on FDA Law Blog should be double-checked for its accuracy and current applicability.

Awards & Honors

March 2011

March 31, 2011

FDA announced on March 30, 2011 that it “does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an individually identified patient unless the compounded products are unsafe, of substandard quality, or are not being compounded in accordance with appropriate standards for compounding sterile products.” This announcement is contrary to FDA’s long-standing policy to not permit pharmacy compounding of drugs that are commercially available and approved by FDA. See FDA, Compliance Policy Guide 460.200 - Pharmacy Compounding.

This change in policy was apparently necessitated by FDA’s approval of Makena® (hydroxyprogesterone caproate) for the reduction of the risk of certain preterm births in women who have had at least one prior preterm birth coupled with public complaints about the cost of Makena®.

It is no secret that regulatory compliance costs industry and consumers money. Cost is not the issue when there is a request for just one more study that delays approval or the Phase 4 commitment that FDA wants to supplement its database. Companies are routinely faced with increased costs for more validation of manufacturing processes or more thorough investigations. A response that compliance just costs too much does not preclude regulatory action such as consent decrees, delays in approval of new products or refusal to grant export certificates. FDA has forced “old” unapproved drugs from the market once the same product(s) are approved. Invariably, the monopoly provided by FDA to the company with the approved new drug has led to higher drug prices to the consumer and to other payors. All of these added costs are justified as necessary to ensure the safety and efficacy of FDA regulated products.

Now FDA has deviated from its customary posture. In its announcement FDA states that “greater assurance of safety is provided by an approved product.” If so, why did FDA decide to change its enforcement priorities? Was it product cost? Political pressure? It appears so. There is a lesson here.

March 30, 2011

Although we were not in attendance at today's argument before the U.S. Supreme Court in PLIVA Inc. v. Mensing (09-993), Actavis v. Mensing (09-1039), and Actavis v. Demahy (09-1501) concerning whether certain Circuit Court decisions “abrogated the Hatch-Waxman Amendments by allowing state tort liability for failure to warn in direct contravention of the Act’s requirement that a generic drug’s labeling be the same as the FDA-approved labeling for the listed (or branded) drug,” we did get a chance to review the unofficial transcript of the oral argument.

Just as with the oral argument in Wyeth v. Levine, the Justices showed a keen interest in the case, interrupting all three attorneys of record with questions before they barely spoke their opening sentences. Petitioners’ attorney, Jay Lefkowitz of Kirkland & Ellis LLP, did a fine job of arguing the case, emphasizing that based on the Court’s decisions in Arkansas La. Gas Co. v. Hall, 453 U.S. 571 (1981), and Buckman Co. v. Plaintiffs’ Legal Comm.,531 U.S. 341 (2001), the Supremacy Clause forecloses state-law claims that depend on speculation about how a federal agency would exercise its exclusive authority, or that otherwise impose or enforce duties to a federal agency. Our fact checker went off when Repondents’ attorney, Louis Bograd of the Center for Constitutional Litigation, started discussing FDA’s ability to quickly take action on application supplements, and in particular equating certain FDA statistics we think are more akin to NDA supplements with ANDA supplements, stating that FDA “also processes supplement requests, according to its web site, in 97 percent of the cases or something, within 4 months. It's not -- it's -- it is a matter of months, not -- not years.”

It is always difficult to prognosticate about Supreme Court decisions. At this juncture we cannot say how we think the Court might rule.

March 29, 2011

At FDA’s public meeting on the food import safety provisions of the Food Safety Modernization Act ("FSMA") (see our prior blog posting here), the challenges posed by implementation of those provisions started to take shape. Presentations by agency personnel, industry representatives, and consumer advocates highlighted the following issues (among many more):

There was genuine enthusiasm for the possibility that certain aspects of the law, such as the Voluntary Qualified Importer Program, could help smooth the importation process for some importers. However, there was also concern that the Foreign Supplier Verification Program requirements could prove unduly burdensome for others. Much will depend on how the agency resolves perhaps the most fundamental issue of all – who qualifies as an importer?

You can read the Deputy Commissioner for Foods' take on the new paradigm for importers here.

Approximately three years ago, the Federal Trade Commission ("FTC") filed a complaint against Daniel Chapter One and James Fijio (“DCO”) for the advertising of four dietary supplements as cures for various cancers. The FTC ruled that DCO’s claims were deceptive and ordered that DCO discontinue its marketing practices and notify its customer that the FTC had determined that DCO’s claims for the dietary supplements were deceptive. Nevertheless, DCO allegedly continued to advertise its dietary supplements as cancer cures.

In August 2010, the Department of Justice ("DOJ"), on behalf of the FTC, filed a complaint seeking civil penalties (up to $ 16,000 per violation), consumer redress, and a preliminary and permanent injunction in the U.S. District Court for the District of Columbia. However, because at the time of filing DCO’s appeal of the FTC ruling was pending, the new action was stayed. Since the Court of Appeals upheld the FTC ruling (see our previous post here), the stay has been lifted. On March 11, 2011, DOJ resumed its efforts against DCO by moving forward with the action mentioned above. Meanwhile, DCO has indicated that it intends to petition the U.S. Supreme Court.

March 28, 2011

Late last week, Par Pharmaceutical, Inc. (“Par”) filed a Complaint in the U.S. District Court for the Eastern District of Pennsylvania seeking a declaration that two recently issued patents – U.S. Patent Nos. 7,858,122 (“the ‘122 patent”) and 7,863,316 (“the ‘316 patent”) (both titled “Extended Release Formulation of Levetiracetam”) – are invalid. Par’s declaratory judgment action appears to be geared to obtain a final court decision that would trigger a forfeiture of 180-day exclusivity eligibility under the FDC Act’s so-called failure-to-market forfeiture provisions at § 505(j)(5)(D)(i)(I) for the first applicant to have submitted an ANDA for a generic version of KEPPRA XR (levetiracetam) Extended-Release Tablets containing a Paragraph IV certification.

FDA approved KEPPRA XR under NDA No. 22-285 on September 12, 2008 and granted the NDA sponsor a period of 3-year new dosage form exclusivity that expires on September 12, 2011. At that time, U.S. Patent No. 4,943,639 (“the ‘639 patent”), which had already expired, but was subject to a period of pediatric exclusivity set to expire on January 14, 2009, was listed in the Orange Book. (The ‘639 patent was also listed in the Orange Book for the immediate-release version of levetiracetam, KEPPRA, under NDA No. 21-872.) Because no generic sponsor submitted an ANDA to FDA for a generic version of KEPRA XR containing a Paragraph IV certification to the ‘639 patent, 180-day exclusivity remained available with respect to a later-listed patent.

On December 28, 2010, the U.S. Patent and Trademark Office issued the ‘122 patent; however, the patent was not submitted to FDA for Orange Book listing until January 7, 2011 (but it is still considered timely listed). (The listing appears to have given rise to a discussion of so-called “anticipatory Paragraph IV certifications” on the popular Linked-In Hatch-Waxman ANDA Litigation Forum managed by Steve Auten.) Upon Orange Book listing, FDA showed the ‘122 patent with a period of pediatric exclusivity (in the printed annual edition of the Orange Book), but the Agency later determined that to be erroneous (as shown in the current electronic version of the Orange Book). Curiously, the ‘316 patent, which was issued on January 4, 2011, and which, as noted above, has the same title as the ‘122 patent, was not submitted to FDA for Orange Book listing. Why? Your guess is as good as our guess. Anyhow, the timely Orange Book listing of the ‘122 patent created the possibility of 180-day marketing exclusivity for the first generic applicant(s) to submit a Paragraph IV certification – either in an original ANDA, or, more likely, as an amendment to a pending ANDA. Clearly, someone decided to do so (and was probably submitting anticipatory Paragraph IV certifications since the ‘122 patent issued), as FDA’s Paragraph IV Certification List was recently updated to show a Paragraph IV submission date of January 7, 2011. (It is unclear at this time who is a first applicant. In addition to Par’s pending ANDA, FDA tentatively approved Torrent’s ANDA No. 91-338 on November 17, 2010.)

Par, which almost certainly has a pending ANDA for generic KEPPRA XR (based on statements in the company’s March 23rd Complaint), appears to have missed the patent certification boat. Instead of amending its ANDA to include a Paragraph IV certification and simultaneously providing notice when the ‘122 patent was listed in the Orange Book on January 7, 2011, Par apparently amended its ANDA and provided notice of its Paragraph IV certification to the ‘122 patent to the NDA holder/patent owner on January 10th and 13th, according to the company’s Complaint. But there might be another way for Par to skin this cat. By obtaining a final court decision that the ‘122 patent is invalid (via the company's declaratory judgment action brought after the NDA holder/patent owner failed to sue for patent infringement within the statutory 45-day period), and provided Par has tentative ANDA approval, which the company says in the Complaint it expects to receive within 30 months of ANDA submission, Par could trigger a bookend event under the (bb) failure-to-market forfeiture provisions.

We recently discussed the bookend events under the FDC Act’s failure-to-market 180-day exclusivity forfeiture provisions and some of the potential interpretations and outcomes based on tentative approval timing. Par’s KEPPRA XR declaratory judgment Complaint is yet another example of what appears to be a growing number of declaratory judgment actions to trigger the forfeiture of 180-day exclusivity eligibility.

March 24, 2011

Hyman, Phelps & McNamara's Jeffrey N. Wasserstein (co-founder of the FDA Law Blog) will be moderating a panel on social media and therapeutic products at the FDLI Annual Meeting, April 5-6, 2011, at the Ronald Reagan International Trade Center, in Washington, DC. The panel will discuss current and future regulatory issues with using social media tools to market therapeutic products. With expected guidance coming this year from FDA, now is the time to become current with the issues. Companies with therapeutic products should also look to the Federal Trade Commission ("FTC") for guidance and potential enforcement actions. Speakers include Glenn Byrd, MBA, RAC, of MedImmune, LLC (formerly of CBER's Advertising and Promotional Labeling Branch), Stacey Ferguson, an attorney with the Federal Trade Commission, Division of Advertising Practices, Bureau of Consumer Protection, and Jeffrey Senger, former Deputy Chief Counsel and Acting Chief Counsel of FDA, now at Sidley Austin LLP. The full conference agenda and sign-up information can be found at: http://www.fdli.org/conf/annual/11/agenda.html.

Today drug and device manufacturers and other stakeholders had an opportunity to provide comments to CMS during an Open Door Forum teleconference on how the physician payment sunshine provisions of the Patient Protection and Affordable Care Act ("ACA") should be implemented. As explained in our memo summarizing the drug and device provisions of the ACA, section 6002 of that statute requires each manufacturer of a covered drug, device, biological, or medical supply that is operating in the U.S. or its territories or possessions annually to electronically report information on payments or other transfers of value made during the prior year to physicians and teaching hospitals. The first report must be submitted by March 31, 2013 for payments made in calendar year 2012.

CMS officials were in self-described listening mode during the Open Door Forum, and did not provide any guidance or answer any questions on how the law will be implemented, other than to say that the agency will initiate notice and comment rulemaking with a proposed regulation later this year. The purpose of the session was to enable CMS to be more focused in its initial proposal. CMS sought comments during the call on several pre-published questions, which fell into three general categories.

The first category of questions asked whether CMS should require disclosure of additional forms of payment and additional specific categories of payments beyond those specified in the statute. The unanimous consensus of participants on the call, which included representatives from PhRMA, BIO, and AdvaMed, was that no new requirements should be added, but CMS should instead focus on establishing clear rules for disclosure of the 14 categories of payments already required by statute. Participants emphasized the need for narrow and detailed definitions of reportable categories in order to ensure uniformity of reporting, prevent double counting of payments, and avoid confusion on how to report payments that conceivably might fall into multiple categories. Examples were given of travel expenses paid to researchers to attend an investigator meeting, which might be considered payments for either research or travel, or payments to members of a data safety monitoring board, which might be viewed as either research payments or consulting fees.

The second category of CMS questions focused on usability of the reported data by the public. Industry trade association representatives all emphasized that the published data reports must be accompanied by background material explaining the vital role of industry-physician interactions in contributing to the design and development of products, the conduct of research, the training and education of practitioners in products and their uses, and other facets of appropriate product use.

Thirdly, CMS asked questions concerning the format of submissions and the process for corrections. Participants recommended the spreadsheet submission format currently used by states, with CMS specifying the reporting template. Several participants urged that manufacturers should have a mechanism for checking CMS’ reports on their payments before the reports are posted on the CMS web site, and at any time after they are posted.

Manufacturers and other stakeholders may submit feedback on CMS’s questions by sending an email to physiciansunshine@cms.hhs.gov by April 7. Manufacturers will have an opportunity to comment on CMS’ proposed rule when it is issued, but early input at this stage will help ensure that the proposed regulation is clear, appropriately detailed, and balanced.

In an unusual step, the State of California’s Department of Insurance intervened in a qui tam lawsuit brought against Bristol-Myers Squibb (“BMS”) by three former employees, including a former member of the L.A. Lakers. In The People ex rel. Wilson v. Bristol-Myers Squibb, Inc., the employees claim that BMS paid kickbacks to physicians and pharmacists to increase prescriptions and dispensing of the company’s drugs. The complaint alleges that BMS caused the submission to private insurers of fraudulent claims that were induced by payments of these kickbacks, in violation of the state’s Penal Code and Insurance Code.

BMS allegedly paid kickbacks to physicians who were high prescribers of the company’s drugs as well as physicians on formulary committees and physician practice groups. Kickbacks described in the complaint included gifts, liquor, gift cards, entertainment and sporting event tickets, participation in two L.A. Lakers “Dream Camps”, high-end dinners, trips to resorts, and cash payments disguised as grants and fees for preceptorships, consulting, advisory boards, and speaker bureaus. BMS also allegedly provided gift cards and meals to pharmacists to induce them to fill prescriptions with BMS products rather than generic equivalents. The plaintiffs and the Department of Insurance are seeking monetary penalties and the disgorgement of millions of dollars in profits stemming from the kickbacks, plus treble damages.

Kickback allegations against pharmaceutical companies have become commonplace in recent years, but the cases have generally been brought under antikickback and false claims laws applicable to federal and state health care programs. What is unusual here is that the claims are brought under state insurance fraud laws with the participation of the state Insurance Commissioner, and they are based on allegations that private insurance plans – not government programs – have been defrauded. According to the complaint, BMS caused false claims to be submitted to insurance policies in violation of Cal. Penal Code Section 550. The plaintiffs also make creative use of California’s runners and cappers statute, Cal. Ins. Code § 1871.7, which prohibits the knowing employment of “runners, cappers, steerers … to procure clients or patients … to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or his or her insurer.” BMS allegedly violated this law by “employing” physicians by paying them kickbacks in order to “procure clients or patients . . . to obtain services or benefits” under an insurance contract, and by employing sales representatives to give kickbacks to physicians to generate prescriptions that would be paid by private insurers. We may see other states follow California’s lead in using state insurance laws – especially those authorizing whistleblower suits – as a prosecutorial weapon against drug manufacturers.

The criminal prosecution of Lauren Stevens, the former in-house counsel for GSK, took another twist yesterday when Judge Titus dismissed her indictment without prejudice. We have previously reported on this prosecution here and here. Judge Titus found that the prosecutors' explanation to the grand jurors of the "advice of counsel" defense was erroneous because the government instructed the grand jurors that advice of counsel was an affirmative defense to be raised at trial. The court said that instruction was erroneous because the advice of counsel defense can negate the intent that must exist for the crimes charged, and thus goes to the question of whether there is probable cause for the charges, a determination that the grand jury must make. The court further ruled that the incorrect instruction raised "grave doubts that the indictment was free from the substantial influence" of the error, which required dismissal of the indictment. Because the court did not find prosecutorial misconduct, the dismissal was without prejudice.

It is not clear what effect this ruling will have on the prosecution. The government's options include, but are not limited to, appealing from the district court's decision; or as the district court allowed, presenting evidence to a new grand jury instructing that grand jury on the advice of counsel defense in accordance with the court's opinion.

Have you been looking for that one, comprehensive publication that covers intellectual property and patent law issues in the pharmaceutical, biotechnology and chemical industries from around the world’s key jurisdictions? Well, it’s finally here – or will be in the next month or so when the Oxford University Press (“OUP”) publishes its 2-volume, 2,536-page “Pharmaceutical, Biotechnology and Chemical Inventions - World Protection and Exploitation.”

The publication, which has been a massive undertaking and in the works for a couple of years, is edited by Duncan Bucknell, the founder and CEO of Think IP Strategy, a global intellectual property strategy firm. Hyman, Phelps & McNamara, P.C.’s Robert A. Dormer and Kurt R. Karst contributed to the publication, providing the United States aspect on various product approval and patent and exclusivity issues. A list of all contributors is provided below. Quite a world class-group!

Here’s a synopsis of the publication provided by OUP:

This book highlights the special issues arising in obtaining, commercialising, enforcing or attacking intellectual property rights (including protection of regulatory data) in the pharmaceutical, biotechnology and chemical industries across the world's key jurisdictions. It is unique in presenting topic matter horizontally by subject to facilitate comparison between country practices. The first two chapters give a general introduction to the differences between the jurisdictions and an overview of some of the key concepts in patent law. The remainder of the book is dedicated to a detailed analysis of the major legal issues arising in these areas of technology. Each component chapter has a comparative introduction, looking at the variances in the laws of different domains, followed by side-by-side analysis of the relevant regimes, including tables and flow-charts which summarise and explain the key legal concepts. The jurisdictions covered are the United States, Europe (UK, Germany, Netherlands, France and Italy), Japan, Canada, Australia, India and China.

OUP has kindly granted FDA Law Blog readers a 20% discount. To claim your discount, just click here (or call OUP at +44 (0) 1536 741727) and use the code “ALBUCK10.” (Note: This offer is only available on orders placed directly with OUP and is not available through any other supplier.)